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The increase in wheat support price

  1. The increase in wheat support price
  2. Frontier Works Organisation

Economic Advisory Board has set an ambitious target of 21 million tons of wheat for 1999-200

From Shamim Ahmed Rizvi, Islamabad
Dec 06 - 12, 1999

The wheat support price has been increased for the 3rd time during the last 2 months with the sole objective of achieving the stage of food autarky in the year 2000. The support price has now been raised to Rs. 300 per 40kg from Rs. 240 last year allowing an increase of over 25 per cent. Shortly before its ouster, Nawaz Sharif government had increased the support price by Rs. 25 per kg and fixed it at Rs. 265 per 40 kg. On the recommendation of the Ministry of Food & Agriculture, the present government raised it to Rs. 285 only 2 weeks back and now it has been raised to Rs. 300 per 40 kg.

It has been done on the advise of the Economic Advisory Board which has set an ambitious target of 21 million tons of wheat for 1999-2000 against actual production of 18.5 million in 1998-99 against the target of 19 million tons. During the year 1997-98 the wheat production registered an increase of about 1.7 million from 16.3 to 18 million when Nawaz Sharif offered a very attractive incentive package which included an increase of about Rs. 50 per 40 kg in the support price of wheat. It is being hoped in the concerned circle that with the latest increase the price of wheat has almost come to international level. With the present highest ever increase allowed, it is expected that the target of 21 million will easily be met which would in turn meet all the local demand including about. 75 million being sent, legally and illegally to Afghanistan. There will be no need to import wheat next year, it is being hoped in the official circles.

Although the government headed by General Pervez Musharraf is being advised not to take any step which may lead to any increase in the prices of commodities of daily use adding to the miseries of common man, the approval of the Chief Executive of the recommendation to increase the support price is not being resented. It is not being resented because it will have no immediate effect on the prices as the increase will be applicable to the crop of 99-2000 which will come in the market in May 2000. By June next year however, the prices of bread will increase by at least 25 per cent which would be big burden on poor. There can be backlashes if some alternate not devised to provide some relief to the poor classes.

Dr. Altaf, Secretary Ministry of Food Agriculture and Livestock who announced the decision of the government said that the government had decided to give priority to Agriculture in its programme of economic development as it fully realised the importance of farm sector in the national economy. He said the Commercial Bank, Agricultural Development Bank (ADBP) in particular which had suspended loaning operations, have also been directed to give loan for rabi seasons immediately to growers from Thursday. This step will help farmers to get competitive prices of their produce on the one hand and country will get self-sufficient in its fast growing food requirements on the other hand.

It may be recalled that the farmers have been pressing for increases in the support price of wheat, cotton and sugarcane for the past several years on the plea of rising cost of production. It is with this contention that the Pakistan Kissan Board threatened to take to the streets in case of non-acceptance of their demand for the increase in the price of wheat. According to the farmers, the prices fetched by the much sought after agricultural commodities for food and industrial consumption remain too low to make them stay in the farming business. That the cost of farm inputs has kept going up with the passage of time can hardly be denied. And the same can be said about the cost of living. As such, with the overall increasing trend in the cost of production and cost of living, those engaged in subsistence farming can ill afford to pull on under increasingly adverse circumstances. It is really unfortunate that the resolution of this problem, critical though it is to the prospects of boosting farm produce, continues to remain relegated to the background. What is all the more intriguing about the perceptible apathy toward agriculture is the ever so evident awareness of the potential of this dominating sector of the national economy.

This is, indeed, a very sorry state of affairs that Pakistan which at one stage was surplus in food, is today facing food crisis, and has to spend huge foreign exchange to meet its domestic requirement. In our neighbourhood India was in really a bad shape as far as its food situation was concerned. Pakistan then had enough wheat to spare and exported the same to India to help the latter to overcome its food crisis. The situation has now reverse. While India has achieved food autarky, notwithstanding its huge population, Pakistan is deficient in food items and has to look to foreign markets to make up for the deficiency. It sounded very strange when Atal Behari Vajpayee, during his visit to Lahore offered wheat to Pakistan.

Now when the present government has accepted the main demands of the farmer lobby dominated by feudals, it is expected that they will gladly accept the imposition of income tax on their income like other people involved in trade and industry and other occupations. The representatives of farmer lobby promised to pay taxes on their income when in 1997 Nawaz Sharif allowed an increase of about 25 per cent in the prices of wheat, sugarcane, cotton etc, but they backed out and manipulated not to pay even the token tax levied.

It is a considered view of independent economists in the country and has been repeatedly vouched by IMF and World Bank that "it is criminal to keep farm income out of tax net", but the powerful feudal lobby, which dominated the Parliament, always successfully and tactfully defied all attempts by various governments in the past to bring this highly potential segment into normal tax net. Last year when the cash starved government of Pakistan was looking into various ways to broaden the tax net, the IMF and World Bank once again emphasized the need of bringing farm income into tax net if the government really intended to have a sizable increase in its revenues without causing any hardship to the common people. Due to their political expediencies, the government of Nawaz Sharif, with all its heavy mandate, could not accomplish the task.

It is now expected that the government of General Pervez Musharraf, which is free from any such political compulsions and does not need the political support of the feudals, can deliver by implementing this measure repeatedly emphasized by the IMF and World Bank and economic managers of the country both within and outside the government. Specially after this substantial increase in the support price of wheat Gen. Musharraf has all the justification to force farm income into normal tax net.